Indian Overseas Bank, Axis among FE Best Banks

It's that time of the year again when The Financial Express honours the best of Indian banking. At a time when the global financial turbulence is taking its toll on even the biggest and most resilient banks around the world, the FE Best Banks 2007 rankings tell you which are the ones among those doing business in India that have performed well in FY07. As the Indian banking environment gets more challenging and competitive, FE brings you the lenders to watch out for.

This year, there are at least two ties in different categories, which reflect the keen tussle for excellence.

Like every year, FE Best Banks rankings have been put out in conjunction with knowledge partner Ernst & Young. Broadly, banks have been categorised as nationalised, new private sector, old private sector and foreign. The rankings are also based on parameters like strength and soundness, growth, profitability, efficiency and credit quality, none of which can be over emphasised in today's banking environment.

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Taj Aviation hub: Uttar Pradesh government seeks to put up its views at inter-ministerial meeting

The Uttar Pradesh government has stepped up effort store trieve the Rs 5,000 crore green field Taj International Aviation Hub (TIAH) in Jewar, which seems to be stuck in inter-ministerial log jam.

Almost two months after a group of ministers (GoM) directed the ministry of law and the civil aviation ministry to "mutually discuss and final is the legal issues", if any,pertaining to the project and come to it with a solution, the UP government has now again written to the ministry of civil aviation and the Prime Minister's Office, requesting that a discussion meeting between the two ministries, under the chair man ship of the cabinet secretary,be held at the earliest. It has also requested that the state government be allowed to participate in the meeting to put up its views on the issue.

According to reliable sources in the state industry department,the letter,written by the infrastructure and industrial development commissioner Atul Kumar Gupta to civil aviation secretary Ashok Chawla a week back, is the latest in the string of correspondences that have been sent

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Jaguar and Land Rover Parks in Tata Garage

Ending months of speculation, the $7.2-billion Tata Motors Ltd announced on Wednesday that it had entered into a definitive agreement with Ford Motor Company for the purchase of Jaguar Land Rover (JLR)-comprising the marquee brands, plants and intellectual property rights-for a sum of $2.3billion to be paid in cash.The transfer of ownership to Tata Motors is expected to close byte end of the next quarter,subject to regulatory approvals.

The purchase of JLR by the Tata group marks yet another milestone in a series of high profile acquisitions that the Indian group, once known for being conservative and slow-moving, has made of late. Last year, it bought UK steelmaker Corus Plcforajaw-dropping$12.7 billion.


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African economies open up to India

Purred by the indomitable spirit of South-South cooperation, and the accompanying changes in the world economic architecture, traditional partners India and Africa have crossed the rubicon to forge a mutually-beneficial economic partnership guided by long-term goals. Africa today views the Indian economy as a successful model to be emulated. Governments and companies in the region see Indian technologies as most appropriate, adaptable and affordable, even as Indian companies are being welcomed into the African countries with greater enthusiasm than ever seen.

The recently concluded fourth CII-Exim Bank India Africa Conclave on Project Partnership 2008, precursor to the landmark India-Africa Forum Summit to be held in New Delhi on April 8, demonstrated the depth and range the partnership has acquired in recent years. Attended by a record 1,000 plus delegates including 606 ministerial and business delegates from 30 African countries, businesses worth nearly $11 billion were discussed between the participating entities in diverse areas such as financial services, education, health care, mines and minerals and agriculture.

The African leaders at the conclave said in no uncertain terms that they look towards India for value addition in the conversion of their natural re sources to productive assets meaning,

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Dynamic babudom is pay panel's tune

With a view to improving government efficiency, the Sixth Pay Commission has suggested a wide-range of measures for civil servants. The suggestions include rewarding high achievers, offering market-driven salaries to specialised talent, overhauling pension rules to attract contract labour, shifting to post-based selection to hire people with the best domain expertise, providing greater flexibility to existing employees and de-layering the government machinery to obtain fewer pay scales.

Bucking the trend of giving uniform pay hikes, the commission has suggested that high performers-who would be judged on improved delivery to end users by an external independent agency--should be given a 1 percentage point higher increment. This performance-linked incentive scheme would also work as a substitute for bonus (whether linked to productivity or ad-hoc), honorarium and overtime allowance.

The commission has also suggested changes in existing appointment procedures to ensure a younger and more dynamic bureaucracy, with a result-oriented approach. Another significant suggestion has been of appointing outside experts on a contract basis, beside government officials, for posts that require technical or specialised expertise.

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We are looking at smarter systems

With power generation high on the government's priority list, companies like ABB are hoping to play an important role in the entire value chain. And, having overseen ABB's China operations, Peter Leupp understands the enormous challenges and opportunities in the sector, especially in developing countries. Now, as head of the company's power systems division, Leupp discussed the energy imperatives for India as well as the future role ABB hopes to play in the country with FE's Anupama Airy. Excerpts:

How do you see the power scenario in India? And given your group's huge exposure in China, how do you compare the two?

India's per capita power consumption is among the lowest in the world (approximately 500 units, compared with a global average of 2,600 units and China's 1,100 units).

With an installed capacity of only around 1.5 lakh mw, the power imperative and the need to add capacity at a rapid pace is clear. But it is just as important for the country to utilise the scarce power it has more efficiently, cut unnecessary losses and conserve energy as it is to add new capacities because power is an expensive and highly capital-intensive proposition.

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Thickest, oldest Arctic ice is melting

The thickest, oldest and toughest sea ice around the North Pole is melting, a bad sign for the future of the Arctic ice cap, NASA satellite data showed on Tuesday.

"Thickness is an indicator of long-term health of sea ice, and that's not looking good at the moment," Walt Meier of the National Snow and Ice Data Center told reporters in a telephone briefing.

This adds to the litany of disturbing news about Arctic sea ice, which has been retreating over the last three decades, especially last year, when it ebbed to its lowest level.Scientists have said the trend is spurred by human-generated climate change.

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Investment cap on Direct To Home may rise

In a move that could open the flood gates of foreign investment in media distribution platforms, the information & broadcasting (I&B) ministry has proposed raising the cap in sectors like direct-to-home (DTH), satellite radio, head end in the sky (Hits) and teleports to 74%.

These sectors currently have variable limits for FII and FDI investment. The move to create a higher composite cap is part of the government's wider exercise aimed at bringing about uniformity in investment policy across sectors.

"The ministry is of the view that the ceiling for total foreign investment limits, inclusive of FII and FDI, both direct and indirect, can be upwardly raised to 74% in the case of infrastructure and platform services like DTH, teleport, Hits and satellite radio," Asha Swarup, secretary, I&B ministry, said here on Tuesday.

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Finance Minister: subprime crisis to hit India

Finance Minister P Chidambaram on Monday said the fallout of the subprime crisis on the global credit and housing markets would impact India.

"When crisis (has) moved from the subprime mortgage market to the housing market, and now the housing market to the credit market, there is impact upon India. There is impact in terms of credit flows and financial flows. But at the moment, I believe that impact is second-order impact and a moderate impact," he said.

Turmoil in the global financial currency markets has started affecting Indian companies and the stock market. While ICICI Bank has lost as much as $264 million up until January due to its exposure in the overseas credit derivatives mar kets, other banks are also facing significant losses.

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World Bank sees United States recession risk

The United States may well be heading into a recession and Europe faces further financial market turmoil too but developing countries are showing little signs of being hurt, World Bank President Robert Zoellick said.

"I am not an economic forecaster. People are debating: Is it going to be a slowdown or recession?," Zoellick told Reuters. "Regardless of that debate, you are facing a serious economic slowdown from what you had before, and there may very well be a recession," he said, referring to the US economy. Further fallout is likely from the squeeze in credit markets that forced US in vestment bank Bear Stearns to seek emergency financing last week, Zoellick said in an interview during the Brussels Forum conference on trans atlantic relations.

"In financial markets in the United States, there is still a lot to go," he said, speaking on Saturday. Europe too was likely to see sub prime mortage-related problems beyond those which affected German banks recently. "My own view (is that) there is more to be worked through in the European market too," said Zoellick, a former US trade representative who also held top Treasury and State Department post.

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State Bank Of India mandated to raise $3 billion for Tata Motors

Tata Motors has mandated State Bank of India (SBI) as the sole lead manager to raise $3 billion that will fund the acquisition of Jaguar and other auto brands. The deal comes as a shot in the arm for the country's largest bank, which did not play much of a role in the earlier Tata-Corus deal.

Confirming the development, a senior SBI official said, "For Tata Motors' acquisition corpus, we have already initiated the process for raising debt worth $3 billion in the overseas market through a syndicated approach. Citibank, Standard Chartered, BNP Paribas, JP Morgan, Tokyo Mitsubishi UFJ and Mizuho Financial Group are the other banks that will pool the resources. We may shortly approach a few Indian public sector banks, too."

The Tata group wants the acquisition corpus to be ready by April 10.

We expect to raise the requisite funds as a foreign exchange bridge loan of 12 to 15 months at around 4.29% in the overseas market. Given the reputation and credibility the Tata group enjoys across the globe, it will not be difficult for us to accumulate the requisite debt at this interest rate in spite of the tight liquidity condition in the overseas market," said the official.

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Rs 10k-Crore Farmers Debt Fund Set Up

The UPA government on Wednesday set up a Rs 10,000 crore Farmers' Debt Relief Fund as the first allocation to its debt waiver scheme. The sum was part of the Rs 43,059-crore cash expenditure of the government in the third supplementary budget for 2007-08, tabled in Parliament by finance minister P Chidambaram.

A banking industry official involved in the policy told FE that farmers who repaid their outstanding agriculture loans in January and February this year would also be eligible under the Rs 60,000-crore debt relief programme. They will be clubbed with farmers that have taken loans before March 31, 2007 but were defaulters as on December 31, 2007 and continue to remain so.

However, farmers who repaid their outstandings prior to December 31, 2007 would not qualify for any refund or incentive. But sections of bankers have urged the government to offer incentives to those who have repaid their debts.

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Airports face paralysis from today

Air travel in most parts of the country will come to a screeching halt from midnight Tuesday. The Airports Authority of India (AAI) employees' union is set to launch its indefinite non-cooperation movement after the civil aviation ministry refused to give in to its demand to keep existing airports at Bangalore and Hyderabad open even after the new airports start operations.

The Delhi government had invoked the Essential Services Maintainance Act to cover all employees working at Indira Gandhi International Airport on February 26 after AAI employees had proposed a strike then."ESMA is till valid,"said an official with the ministry.

The strike is likely to least affect Delhi and Mumbai airports, as they are operated by private consortiums, DIAL and MIAL,respectively.

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By Prime Minister's admission, he couldn't sort out the mess even after 4 yrs in office

The Prime Minister launched a "scathing"attack on the NDA in Parliament on March 5 for leaving behind problems such as in debted farmers and rising prices.

"What we have done is nothing more than picking up the unpaid distress bill which the NDA government left behind",he said.The media was quick to praise the Prime Minister for his political maturity and for hitting back at the NDA.It has taken the Prime Minister seventeen years to mature politically and four years to recognise the mess we left behind.At the same time,by his own admission, he has not been able to sort out this mess even after four years in office.

Let us analyse the charges levelled by the Prime Minister with reference to the facts placed before Parliament by the UPA government itself.The first Economic Survey of this government for the year 2003-04 was presented to Parliament on July 7, 2004, full six weeks after it assumed office and after it had all the time in the world to study the economic situation. This is what the Economic Survey said in its very opening sentence, "The economy appears to be in are silient mode in terms of growth, inflation and balance of payments, a combination that offers large scope for consolidation of the growth momentum with continued macro-economic stability". It further said, "The economy has enjoyed the benefits of relatively low inflation with comfortable stocks of food grains, enhanced competition in product markets and an appropriate mix offiscal and monetary policies."

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State Bank of India is world major in branch network

State Bank of India (SBI) on Sunday became the second bank in the world to have 10,000 branches after China's Industrial and Commercial Bank of China when finance minister P Chidambaram inaugurated its latest branch at Puduvayal at Sivaganga district in Tamil Nadu. Sivaganga is the home constituency of Chidambaram.

Delhi-based Punjab National Bank (PNB) has the second largest network in India, with about 4,500 branches, KC Chakrabarty, chairman, PNB. Canara Bank, Bank of Baroda and Central Bank of India are the other banks with extensive branch networks.

Chidambaram, in his inaugural address, said: "It is a great moment for all of us. It is not an easy task for a bank to have such huge number of branch network and SBI did it in its 202 years of existence. I wish SBI to become a one-lakh branch network major in the next 50-60 years."

People all over the world, including the Chinese, would now know about this small village where the 10,000th branch of the SBI had been opened, he said adding they would be amazed by the bank's growth.

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Web Sent SMSs now face Restrictions

Sending free SMSs via websites won't be easy anymore.

Concerned at the misuse of the service, by sending messages using other people's numbers, a DoT-industry committee has now decided that only websites authenticated by the mobile operators can be used for sending such messages.

The operators have given an undertaking to the department of telecommunications (DoT) that they would comply with the new directions.

Till now, websites didn't need an authentication from service providers for the SMS service. DoT and the service providers have been receiving complaints about the misuse of the service wherein users would send messages by using someone else's mobile number, which is a security threat.

The move would also dampen the spirits of websites that send SMSs to consumers for promotional purposes. These websites now need to be authenticated by the operators.

The committee has also decided that the service providers must also ensure that the SMSs received by their network from a website would not have India's country code +91 as the sender party's address. The code +91 is strictly reserved for messages sent from a mo bile phone. However, the service providers' responsibility would not extend to the content of the messages, which would solely lie with the content providers.

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Reliance Retail lines up Esops to retain its staff

Reliance Retail Ltd (RRL), the organised retailing subsidiary of Reliance Industries Ltd (RIL), is understood to be readying a major employee stock options plan (Esop). The Esops are a part of RRL's strategy to reward its employees who the company sees as critical to its ambitious retail roll out strategy.

While the Esops scheme is expected to be upwards of Rs 300-400 crore, there is no confirmation of either the details of the scheme or the number of employees it will cover.

An RIL spokesperson merely said the company does not comment on speculation.

However, what is clear is that the Esops is part of a strategy being put in place by RIL for its retail subsidiary. With over 500 stores in 50 cities in place, and a hefty Rs 25,000 crore investment plan lined up, the company feels training its re tail business employees is also critical for the booming retail industry. The retail industry is known for high attrition, and hence the Esops is also expected to be a key element of the company's retention strategy.


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Nano manufacture may be licensed

Tata Motors chairman Ratan Tata has said his company was willing to help young entrepreneurs manufacture the Nano, the new mass car expected to sell for a little over Rs 1 lakh.

"Every decision must be based on demand for the car.If we cannot meet it, we will look at licensing manufacture. If we cannot meet it, we will look at licensing manufacture. In order to create opportunities for manufacturers, the company can consider having franchise manufacturing units, by selling licences to young entrepreneurs to make the car," Ratan Tata told Indian journalists on the sidelines of the 78th Geneva Motor Show on Tuesday.

Tata Motors unveiled the European model of the Nano here. He said the European version would be positioned on the same platform as the one back home-as an affordable family car.

However, Tata did not divulge the price of the Nano for European markets. Taking on some overseas rivals, who questioned the fuel efficiency of the car, Tata said, "The Nano would provide an affordable form of transport.These are the same manufacturers who used to say that the product cannot be manufactured at this price tag."


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US housing crisis puts off first-time buyers

For decades, buying a home was a key step on the path to financial security for the American middle class. Home owners could count on a fixed mortgage payment rather than rising rent, take advantage of tax breaks, and build equity as their houses increased in value over time. But with home prices falling and families losing their homes to foreclosure, some people who under other circumstances would be looking to buy their first home now see greater security in renting.

One such person is Lisa Chesnut, who lives in Tucson, Arizona, and works as an information systems coordinator. With a good job and two young sons, 29-year-old Chesnut and her husband, Bryan, look like classic first-time buyers.

They had considered it, until the the market started to slide a year ago. "At first we thought, prices are falling, that's good," she said in a phone interview. "Then we started reading about the foreclosures and the ARM rates and people losing their homes," she said. "We thought, what if something happened where we could lose our house?"

Her big fear is falling behind on a mortgage. Having read about people who face higher payments on their adjustable-rate mortgages (ARM), she realizes that being approved for a loan does not guarantee it will be affordable.

One sign that more people are choosing to remain in rental apartments while they wait out the slump comes from Equity Residential , one of the largest U.S.

apartment owners. Fewer people have been moving out of its apartments -- last year 63.3 percent of its units changed hands, down from 64.9 percent in 2006.

"Turnover is slowing and the rate of moving out for home purchase we also saw slow throughout 2007," said Fred Tuomi, president of property management at the Chicago-based company, who oversees about 150,000 apartments nationwide.

And population projections by the National Association of Realtors suggest hundreds of thousands of young Americans are sitting out the housing market entirely -- neither buying nor renting. "There's probably 700,000, maybe 800,000 people out there that are not getting into the market either as a renter or as a homebuyer," said Walter Molony, spokesman for the NAR.

"Where are these folks? They're out there, they've got jobs. Some of them are moving back with their parents, never left the house, they're doubling up with roommates."


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Budget blows a googly toTax cases

The Budget proposal to empower income tax assessing officers to take action against defaulters without having to give reasons can stir a hornet's nest.

At present, these officers have to give definite reasons before taking action and officially record their ‘satisfaction' that a case, indeed, merits penalties. But Budget 2008-09 has proposed that they need to give only a direction for initiating penalty proceedings. The move will come into effect retrospectively from April 1, 1989 and could, potentially, reopen thousands of such cases. The decision will also be applicable to all wealth tax cases.

Typically, penalty for defaulters includes fines and/or a prison term, depending on a case's severity.

The move follows intense judicial debate on the issue, which has created confusion. Some courts have said the assessing officers must come out with definite reasons. For instance, the Delhi High Court, in the case of CIT versus Ram Commercial Enterprises Ltd, has held that such a ‘satisfaction' must be recorded. But other courts say this is not required.

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